U.S. automakers cut sports ad budgets

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By Tim Lemke

Struggling U.S. automakers are slashing advertising budgets, costing major sports leagues and their broadcasters tens of millions of dollars in revenue and support - and foreign automakers increasingly are stepping in to fill the void.

American car manufacturers General Motors, Ford and Chrysler have long been big backers of the National Football League, Major League Baseball and other leagues, striking exclusive sponsorship deals and spending more than a third of their television advertising budgets on sports-related commercials.

That spending has dipped significantly over the past year and many experts predict an even steeper decline ahead, leaving the sports world scrambling to find new money.

Spending by U.S. automakers on television commercials during sporting events has dropped more than $100 million, or 10 percent, according to statistics from TNS Media Research.

Television ad spending by most foreign automakers, meanwhile, has increased at a similar rate, and the National Hockey League, National Basketball Association, the United States Golf Association and other sports entities have struck new partnerships with non-U.S. firms as Toyota, Honda and Hyundai/Kia, among others.

"So much of it is tied to the bottom line and how well companies are doing," said William Chipps, senior editor of the IEG Sponsorship Report. "You look at some of these numbers coming out of Detroit, and the answer's right there."

With tightening credit markets and a dragging economy, October is expected to be one of the slowest months in more than 25 years for U.S. auto sales, with the industry seeing a 13 percent drop, according to J.D. Power and Associates.

Foreign automakers also have experienced sales declines, but these decreases have not been as severe as those suffered by U.S. counterparts, and the foreign manufacturers are more healthy financially overall, analysts said.

Shares of GM and Ford have plummeted in the past two weeks along with the rest of the stock market. GM closed Friday at $6.43, down from more than $23 a month ago. Ford closed at $2.43, down more than 50 percent from the beginning of October. The struggles of GM and privately held Chrysler have led both firms to discuss a merger.

Sports leagues have found their support from U.S. automakers dwindling for more than a year. Ford, for instance, has dropped several sponsorships on golf's PGA Tour, including the Senior Players Championship. GM's Chevrolet brand is dropping sponsorships at as many as a dozen NASCAR tracks next year. And Dodge was recently replaced by Honda as the official car of the NHL.